Realogy trades better with research report; Steak 'n Shake downsizes; DaVita upsizes

By Sara Rosenberg

New York, Aug. 26 - Realogy Corp.'s extended and non-extended bank debt saw a noticeable improvement during Friday's quiet trading session amidst talk that a positive research report was put out on the company.

Over in the primary, Steak 'n Shake reduced the size of its term loan and, as a result, the amount of its dividend payment, and with this change, the deal has filled out at initial talk, and DaVita Inc. upsized its term loan A-2 and wrapped the deal at original guidance.

Realogy rises

Realogy, a Parsippany, N.J.-based provider of real estate and relocation services, saw its bank debt gain ground in trading with chatter that there was a favorable research report that surfaced on Friday, according to traders, who added that the another factor helping the name was that it was oversold.

The company's first-lien extended strip of debt was quoted at 80½ bid, 81½ offered, up from opening levels on Friday of 80 bid, 80¾ offered and late-day levels on Thursday of 79 7/8 bid, 80 3/8 offered, traders said.

Also, the non-extended strip and non-extended delayed-draw term loan were quoted at 88¾ bid, 89¾ offered, up from opening level of 87¾ bid, 88¾ offered, and Thursday's levels of 87¼ bid, 88¼ offered, traders continued.

Meanwhile, the 13½ second-lien debt was quoted at 98 bid, 99½ offered around midday, versus 97½ bid, 99½ offered on the open and 97½ bid, 99½ offered on Thursday. By late day, the debt was seen at 97½ bid, 98½ offered.

Steak 'n Shake cuts loan size

Moving to new deal happenings, Steak 'n Shake trimmed its four-year term loan to $110 million from $140 million, resulting in the reduction of the return of capital to the parent by about the same amount, according to a market source.

Pricing on the term loan was left unchanged at Libor plus 450 basis points with a 1% Libor floor and an original issue discount of 99, and there is 10% amortization per annum.

The company's now $130 million credit facility (B1), down from $160 million, also includes a $20 million three-year revolver.

In addition to funding the dividend, the credit facility will be used to refinance existing debt.

Steak 'n Shake allocations

Now that structure on Steak 'n Shake has firmed up, accounts are expecting that allocations will go out during the week of Aug. 29, the source said.

Jefferies & Co. is the lead bank on the deal that launched with a bank meeting on July 28.

Senior leverage is 3.0 times. This is down from 3.2 times originally as a result of the change to the term loan amount, the source added.

Steak 'n Shake is a quick-service restaurant chain founded in Normal, Ill.

DaVita ups A-2 tranche

DaVita raised its term loan A-2 due October 2016 to $200 million from $100 million and left pricing at Libor plus 350 bps with a 1% Libor floor and an original issue discount of 991/2, a market source said. There is a step-down to Libor plus 325 bps based on ratings.

The company also got a $100 million revolver add-on due 2015 that is priced in line with its existing revolver. Lenders were paid a 100 bps commitment fee for providing this revolver increase.

Wells Fargo Securities LLC acted as the lead arranger on the deal that, according to an 8-K filed with the Securities and Exchange Commission, closed on Friday. J.P. Morgan Securities LLC is the administrative agent.

DaVita, a Denver-based provider of dialysis services, will use proceeds for general corporate purposes.

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